The real estate market has changed significantly across Germany in recent years. In some regions, including Berlin for example, prices have risen significantly. Other parts of Germany have not seen any positive increase in the value of real estate. However, the value of almost all properties changes over time. If you are thinking about selling your condominium or house, you will probably want to find out how much the property is actually worth at the current time. There are various methods for determining the value of a property.
The inventory as the basis for real estate valuation
Owners want to determine the value of their property for a variety of reasons. Some of them want to sell the condominium in order to change their lives. Others are getting divorced and need to determine the gain during the marriage as part of the process. Still others have inherited the property and want to find out how much it is worth. Of course, it may also be that pure curiosity is the reason for carrying out a property valuation.
The reasons are actually irrelevant, because the basis for such a valuation procedure is always an inventory. The following questions must be answered in detail:
- What is the gross volume of the property?
- What area of living space and land does the property comprise?
- When was the property built?
- Where is the property located?
- How high is the demand in the region and neighborhood?
- How high are the management costs of the property?
- How well maintained is the property?
If you commission an estate agent to determine the data, the information about your property will be available to you within a short time. However, you can also carry out the inventory yourself. Make sure you answer the questions honestly and find sources for the values that are as reliable as possible. If you do not do this, there is a risk that your property valuation will not produce a reliable result.
Determining the market value
In § 194 BauGB, the legislator has stipulated that the market value is calculated on the basis of the condition and location of a property. Consideration must be given to the free market. The market value is determined for a specific point in time and is subject to daily fluctuations. There are a total of three methods that are permitted when determining the value of a property. In addition to the substance and location of a property, they also take into account the current market situation.
Determining the value of a property using the comparative value method
With the comparative value method, the intersection is decisive. Other properties that are comparable in terms of construction, substance and location are included in the valuation. This method can be used if the property is not very individual. There are a large number of terraced houses, semi-detached houses, detached houses or new-build apartments in most municipalities. When comparing two or more properties, it is important that they are as similar as possible. In addition to the substance of the property, its location also plays a major role. Market conditions may be completely different just a few kilometers away.
If you keep these things in mind, the formula for the calculation is not difficult. Average the sales price of comparable properties and add value-enhancing elements such as a swimming pool, fireplace or conservatory.
The asset value method at a glance
If there are no properties in the vicinity whose average value could be used to determine a price using the comparative value method, then the asset value method is usually used. Here, the building value and land value are calculated separately and then added together. Factors such as construction costs, age value reduction and market adjustment factor are used for this.
The income capitalization approach for rented properties
If a property is rented out, the income capitalization approach can be used to determine the property value. First of all, the land value is calculated. To do this, the standard land value and the size of the plot are multiplied. The building income value must then be determined. The building income is calculated by subtracting the interest on the land from the net income of the property.
If you need help with the valuation of your property and are looking for a suitable formula, you can contact our team of experts at any time – we will be happy to put our experience at your disposal when it comes to the professional valuation of your property!
